IP Case Law Analysis

New Method for Calculating U.S. Patent Term Adjustment

January 15, 2014

Consider the impact on patent term adjustment (PTA) when filing a Request for Continued Examination (RCE).

Postpone an issue fee payment to obtain longer PTA.

Overview

In Novartis AG and Novartis Vaccines and Diagnostics, Inc. v. Michelle K. Lee, the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) confirmed that patent term adjustment due to the U.S. Patent and Trademark Office (USPTO)’s failure to grant a patent within three years after filing does not include any time consumed by continued examination filed by the applicant. However, time from allowance to issuance is plainly attributable to the PTO, regardless of whether continued examination was filed.

Case Background

Novartis filed suits challenging the determination by the USPTO of how much time to add to the terms of various Novartis patents. In particular, Novartis asserted that the PTO mistakenly excluded from PTA calculation any time spent in a continuing examination, including the period from allowance to issuance, no matter when the continuing examination was initiated by the applicant.

The district court ruled that the USPTO’s calculation was contrary to the law. The USPTO appealed this ruling.

Decision Analysis

Novartis made two arguments to challenge the PTO’s PTA calculation. First, Novartis argued that the statutory language indicates that filing a continued examination has no effect on the three-year time period unless it is initiated within that period. Second, Novartis argued that the time consumed by continued examination ends when a Notice of Allowance is issued, as long as no later examination actually occurs.

The Federal Circuit disagreed with Novartis’s first argument. It stated that the better interpretation of the statutory language is that PTA should be calculated by determining the length of the time between filing and issuance, then subtracting any continued examination. The court reasoned that such an interpretation would—as the law requires—compensate an applicant for any delay caused by the PTO but not allow the applicant to recover for the time consumed by continued examination.

On the other hand, the Federal Circuit agreed with Novartis’s second argument. The court ruled that time from allowance to issuance is plainly attributable to the PTO, if it fails to grant a patent within three years after its actual filing, regardless of whether a continued examination was filed.

Takeaways

If patent term is important to you, consider the impact of filing a Request for Continued Examination on PTA calculation. In certain cases, using the After Final Consideration Pilot 2.0 Program may help you to avoid filing an RCE. Further, if a patent is likely to issue after the three-year anniversary, you may consider postponing issue fee payment to obtain longer PTA.